Karnataka High Court
Refex Energy Ltd vs Bharat Heavy Electricals Ltd on 12 June, 2020
Author: S R.Krishna Kumar
Bench: S.R.Krishna Kumar
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IN THE HIGH COURT OF KARNATAKA AT BENGALURU
DATED THIS THE 12TH DAY OF JUNE, 2020
BEFORE
THE HON'BLE MR. JUSTICE S.R.KRISHNA KUMAR
C.M.P.NO.97 OF 2020
BETWEEN
Refex Energy Ltd.
11th Floor, Bascon Futura SV Towers
Venkata Narayan Road, T.Nagar
Chennai - 600017.
Represented herein by its
Chief Financial Officer,
Mr. Mahesh Kumar Sharda
...Petitioner
(By Sri. Sandeep Huilgol, Advocate)
AND
1. Bharat Heavy Electricals Ltd.
Electronic Division, Mysore Road,
Bangalore - 560026.
2. Mr. M.N. Narasimhachar
Hon'ble Sole Arbitrator
895, 9th Cross, W.O.C. IInd Stage,
Mahalaxmipuram, Bangalore - 560086.
...Respondents
(By Ms. Beena P.K., Advocate for R1)
This Civil Miscellaneous Petition is filed under
Section 11(6) read with Section 14(2) of the Arbitration
and Conciliation Act, 1996, praying to declare that the
mandate of the 2nd Respondent herein as the Sole
Arbitrator appointed vide letter dated: 22.04.2016 bearing
No.EDN/511/Legal-209/2016 (Annexure 'E') has
terminated as the 2nd Respondent has become de jure
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unable to perform his functions as the Arbitrator and
consequently appoint an Arbitral Tribunal comprising of
an independent Sole Arbitrator to decide and adjudicate
upon all the disputes arising between the petitioner and
the 1st Respondent invoked vide letter dated 22.04.2016
(Annexure 'D') addressed by Respondent No.1 and etc.
This petition coming on for admission this day, the
Court made the following:
ORDER
Heard learned counsel for the petitioner as well as learned counsel for respondent No.1.
2. Learned counsel for the petitioner while reiterating the various contentions urged in the petition places reliance upon the judgments of the Hon'ble Apex Court in the case of TRF Ltd V/s Energo Engineering Projects reported in (2017) 8 SCC 377 and in the case of Bharat Broadband Network Limited V/s United Telecoms Limited reported in (2019) 5 SCC 755 in order to contend that having regard to the provisions contained in Section 12(5) of the Arbitration and Conciliation Act, 1996 (for short 'the Act') as amended in 2015, the sole Arbitrator (2nd respondent herein) appointed to 3 resolve the dispute between the petitioner and the respondent is ineligible to continue the arbitration and as such, his mandate has to be terminated and a new Arbitrator is to be appointed and substituted in the place of 2nd respondent - Arbitrator.
3. Per contra, learned counsel for respondent No.1 who has filed its statement of objections to the main petition as well as the application for stay would reiterate the various contentions urged in the statement of objections. Learned counsel for respondent No.1 would also invite my attention to the conduct of the petitioner in participating not only in the arbitral proceedings before the sole Arbitrator but also acquiescing to the appointment of respondent No.2-sole Arbitator in the proceedings in AA No.164/2018 initiated by respondent No.1 for extension of time for completion of arbitral proceedings. Learned counsel would also place reliance on the judgments of the Hon'ble Apex Court as well as this Court, as under:-
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(i) Sri. Krishna Shelters Pvt. Ltd Vs. Union of India and Ors - 2020 (1) AKR 120;
(ii) SP. Singla Constructions Pvt. Ltd Vs. State of Himachal Pradesh and Ors. - 2018 (6) ARBLR355(SC);
(iii) Indian Oil Corporation Ltd. And Ors. Vs. Raja Transport (P) Ltd. - 2010(6)ALT17(SC);
(iv) The Government of Haryana PWD Haryana (B and R) Branch Vs. G.F.Toll Road Pvt. Ltd and Ors.
4. It is contended that the judgments relied upon by the petitioner are not applicable to the facts of the case particularly, when 2nd respondent-sole Arbitrator is an erstwhile employee of 1st respondent having retired 11 years back and consequently, the disqualification contemplated in the seventh schedule to the Act does not apply to 2nd respondent.
5. After hearing the rival submissions, this Court felt that in order to ensure that further disputes with regard to the neutrality, qualification or eligibility of the Arbitrator should not arise between the parties, it would be just and proper to appoint 5 another sole Arbitrator in substitution of the 2nd respondent. Accordingly, the new sole Arbitrator would continue the proceedings from the stage from where the matter presently stands before the 2nd respondent.
6. Under these circumstances, without expressing any opinion or going into the merits of the rival contentions and also without prejudice to the rights and contentions of both sides, I deem it fit and proper to appoint another Arbitrator in the place of the 2nd respondent to adjudicate upon the dispute between the petitioner and the 1st respondent. Both the counsel do not have any objection for this course of action to be adopted by this Court for the purpose of disposal of this petition.
7. In the circumstances I pass the following:
ORDER
(i) The mandate of 2nd respondent-sole Arbitrator in respect of the proceedings between the petitioner and 1st respondent pursuant to the letter dated 22.04.2016 6 bearing No.EDN/511/Legal-209/2016 is hereby terminated.
(ii) Sri. A.V.Chandrashekhara, a Retired Judge of this Court is appointed as a sole Arbitrator to resolve the dispute between the petitioner and 1st respondent.
(iii) It is submitted by both sides that pleadings are complete, issues have been framed and the claimant-respondent No.1 has already filed an affidavit by way of examination-in-chief of its witness and the matter is set down for cross examination of the claimant's witness.
(iv) Under these circumstances, the aforesaid sole Arbitrator appointed by this Court is hereby directed to continue the proceedings from the stage of cross -
examination of the claimant's witness and complete the proceedings.
(v) Having regard to the fact that the present petition has been filed after lapse of four years after commencement of the arbitral proceedings, I deem it proper to impose cost of Rs.35,000/- (Rupees Thirty 7 Five Thousand only) payable by the petitioner to the 1st respondent towards cost of this petition.
(vi) Registry is directed to send a copy of this order to the sole Arbitrator Sri.A.V.Chandrashekhara at the earliest.
(vii) The sole Arbitrator is also requested to complete the proceedings as expeditiously as possible.
(viii) All rival contentions between the parties are left open.
Ordered accordingly.
Sd/-
JUDGE RB